Greece says can return to bond markets even without ECB’s QE as yields slide

The yield of Greece’s 10-year bonds continued to slide this week, in spite of a significant rise in bond yields throughout the Eurozone. As a result, the yield spread between the Greek and German benchmark bonds dropped below 5 pct during trading on Friday morning, with the Greek bond yielding 5.30 pct and the German Bund yielding 0.45 pct.

Greek bonds yields had dropped 66 basis points lower than one month ago and 282 basis points lower than a year ago.

According to a Reuters report, the yield on the German 10-year bonds recorded its largest weekly increase since December 2015 during a week in which Eurozone bond yields soared, as investors prepared for the end of a period of very loose monetary policy.

Finance Minister Euclid Tsakalotos said on Thursday that Greece’s short-term objective is to return to bond markets and this will be possible even without the inclusion of its bonds in the European Central Bank’s asset-buying programme Quantitative Easing.

Last year, the ECB said that conditions were not right yet for Greece to be included in its bond-buying quantitative easing programme.

“The Greek government now has a short to medium-term objective which is of course access to the markets, which is… a possibility with or without QE,” Tsakalotos said at the Economist conference in Athens.

Tsakalotos said that Greece would “soon indicate” to investors the strategy for its bond market return — the first since 2014 — but the aim, he said, was not to make just a one-off attempt.

“We don’t want to go too early but … when we do go, we want to ensure that markets know that this is part of a strategy,” he said.

Tsakalotos said quantitative easing would help Greek banks, but that it was largely symbolic.

“I wouldn’t elevate it too high and I don’t think that investment funds and equity funds elevate it that high,” he said. “It is very useful, it is important, but mostly it is symbolic.”

Tsakalotos said he was “entirely confident” that Greece would post “good growth” in 2017 and 2018, but the country’s aim was to make sure that this growth is sustainable.